Joe Hockey seizes on surge in economy

By
Gareth Hutchens and James Massola

Treasurer Joe Hockey seizes on Wednesday's national accounts, which show Australia's economy has grown at its fastest pace in nearly two years on the back of an unexpected surge in mining exports, to declare Australia has a 'good story to tell'.

Joe Hockey seizes on surge in economy

"We needed a budget at this time that demonstrated to the community that we were prepared to take the tough decisions": Treasurer Joe Hockey. Photo: Alex Ellinghausen

Treasurer Joe Hockey has seized on Wednesday's national accounts, which show Australia's economy has grown at its fastest pace in nearly two years on the back of an unexpected surge in mining exports, to declare Australia has a ''good story to tell''.

Mr Hockey highlighted ''green shoots'' in Australia's economy, including the creation of 106,000 jobs and economic growth of 3.5 per cent, higher than the vaunted ''trend growth'' figure of 3.25 per cent

But in question time, Opposition Leader Bill Shorten used the economic good news to press the government on its tough budget cuts.

''Can [Mr Hockey] explain why his government's ugly budget is putting a new tax on petrol, putting a new tax on going to the doctor, hurting pensioners and veterans, hurting families [and] cutting $80 billion from schools and hospitals?'' Mr Shorten said.

Mr Hockey hit back at Labor's political attack, arguing the former government had left a legacy of debt and stringent budget measures were necessary.

''We needed a budget at this time that demonstrated to the community that we were prepared to take the tough decisions and to get our economy on the straight and narrow once again,'' he said.

New Bureau of Statistics figures showed the economy grew by 1.1 per centin the first three months of this year after a jump in mining exports. The mining sector was responsible for 80 per cent of that growth as export volumes surged at their fastest rate in 13½ years.

Economists were caught off guard by the pace of the export growth, saying the mining boom had shifted from its investment phase to its production and export phase. But others warned the jobless rate could creep higher because the production phase will not be labour intensive.

''The economy is weathering the end of the mining investment boom well … [but] growth will not be sustained at this pace for the next few quarters,'' AMP Capital chief economist Shane Oliver said.

''It's too early to break out the champagne.''

Mr Hockey also said he would not revise his expectations for the unemployment rate to creep higher than 5.8 per cent. But he said the positive GDP figure, coupled with strong growth in employment in recent months, showed the Abbott government's controversial decisions on car manufacturing, SPC Ardmona and Qantas had not damaged the economy.

A breakdown of the ABS data showed NSW was the best-performing state once net exports were taken out of the equation.

WA and Queensland detracted from national economic growth once net exports were removed.

NSW private investment grew 9.3 per cent in the March quarter, with public investment (3.2 per cent) and government spending (1.2 per cent) growing strongly

The NSW government seized on the data.

''Our housing approval figures are the highest they've been in over a decade, we're leading the nation on retail sales growth, and we have the second-lowest unemployment rate in the nation,'' NSW Treasurer Andrew Constance said

St George senior economist Jo Horton said NSW would expect to be a beneficiary of greater investment as the economy moved towards the non-mining sector.

''We have seen residential construction growing in NSW because low interest rates tend to have a larger impact here than in other states because our prices are higher and people generally have larger mortgages on average.''

Economists said the Reserve Bank would be happy with ABS data because it showed its monetary policy was working - people were borrowing money and housing construction had grown strongly.